Beijing
West Texas Intermediate (WTI) Oil price extends its losses for the third consecutive session, trading around $80.10 per barrel during the European hours on Tuesday.
This decline is attributed to a slowing Chinese economy, which is reducing demand in the world’s largest Oil-importing country.
China’s Gross Domestic Product (GDP) grew 4.7% year-over-year in the second quarter, compared to a 5.3% expansion in the first quarter and an expected 5.1%.
The National Bureau of Statistics (NBS) reported that China’s economy operated generally steadily in the first half of the year, with H1 GDP growth at +5.0% year-on-year. Looking ahead, the NBS highlighted increasing external uncertainties and numerous domestic challenges that China’s economy faces in the second half of the year.
Crude Oil imports fell both month-over-month and year-over-year to 46.45 million tons in June. This decline aligns with indications that the rapid adoption of electric vehicles in China may mean that demand has already peaked. Year-to-date shipments are 2.3% lower than the same period last year, per Bloomberg.
In the United States, Federal Reserve Chair Jerome Powell mentioned on Monday that this year’s three inflation readings “add somewhat to confidence” that inflation is on track to meet the Fed’s target sustainably, suggesting that interest rate cuts may not be far off, per Reuters.
Additionally, Fed Bank of San Francisco President Mary Daly noted that inflation is cooling in a way that increases confidence it’s heading toward the 2% target. However, Daly emphasized the need for more data before making a rate decision. Lower interest rates reduce borrowing costs, potentially boosting economic activity in the United States, the world’s largest economy, which may increase Oil demand.
